Why the Food Industry Needs Blockchain Today

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May 8, 2019
Why the Food Industry Needs Blockchain Today

This article originally appeared in its full entirety in the March/April issue of Mfgnet.

According to MHI's Annual Industry Report, Blockchain adoption in the supply chain industry currently stands at five percent. That number is projected to climb to 54 percent over the next five years, as more companies across industries look to deploy the technology. In particular, Blockchain holds tremendous value for the food industry, which has long been challenged by widespread networks of ingredient suppliers, production sites, distribution centers, transportation providers, grocers and retailers.

Originally developed in 2009 to track the exchange of Bitcoins, Blockchain offers a radical, new way for food producers to connect their disparate value chains. Every transaction and product movement between parties is logged and saved in cryptographic blocks. Each sequential transaction is linked to the previous one, creating a complete, auditable trail. These records are decentralized and visible to the whole network, building greater transparency and trust among everyone working together in the food supply chain.

Blockchain technology is an ideal solution to key challenges in modern food manufacturing, specifically in demand planning, ensuring food safety and managing product shelf life.

Protecting consumers and the business for food safety’s sake
The permanency of transactions logged using Blockchain has made the technology a top consideration for companies looking to mitigate the negative impacts of food safety incidents. Most recently, Walmart and Sam’s Club have mandated that their leafy greens suppliers use Blockchain to trace their products from farm to fork. The initiative follows last year’s E. coli scare, when customers, grocers and restaurants around the United States had to throw away large amounts of romaine lettuce to prevent further spread of a contamination that started in Yuma, Arizona. The problem was that many were unsure about where their lettuce was grown, so the safest option was to just get rid of it all.

But with a permanent, digital ledger through Blockchain, companies can easily trace back the record of transactions and product movements to find the source of a problem. Perhaps more importantly, they can then concretely determine which lots or shipments were affected, follow the trail to the retail level, and pull any dangerous goods off store shelves. On the consumer side, this protects buyers from possible health issues and eases their minds about what they are purchasing and eating. For businesses, it means they can do a more targeted recall, rather than remove everything—including good products—from the market, minimizing lost profits from recalled product destruction, as well as any damages to brand reputation.

Optimizing product shelf life in stores and homes
The food business is unique from other consumer goods industries in that the products being sold are perishable and have a limited shelf life. For example, in fashion, brands and retailers can use secondary markets and outlet stores to sell off excess channel inventory. But in food, grocers and retailers obviously cannot sell a product past its expiration date. So, companies have to get goods to market fast to maximize the sales window, and then be able to see what is nearing expiration in order to replenish inventories. It is a challenging balancing act, especially when considering a single brand may be working with thousands of food retailers. For companies in the emerging direct-to-consumer grocery and prepared meals space, the challenge is exponentially greater as they try to manage the expiration dates of goods in distribution to millions of households across the country.

Click here to read the full article online.

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